Insurance valuation services are usually required to establish the amount of insurance required for the purposes of establishing cover or determine the sum to be paid following loss or damage as a result of an insured peril.
Often there can be confusion between the market value of a building and the reinstatement value following a catastrophic loss. On one hand, the value of the site cannot be discounted as it still exists in most cases but in addition the site must be cleared, waste removed, architects and engineers engaged, local authority permission sought, fire certificates granted etc. and all this takes time.
In the past few years in Ireland, we have a seen huge changes in values attributed to property. Many owners, managers and landlords are reviewing their insurance premiums to make savings where it can be demonstrated that their buildings may now be overvalued for insurance purposes. Most policies provided for an annual increase in line with inflation, which had rocketed during an era of rapid capital growth and low interest rates.
When carrying out an insurance valuation, we first measure the building, using Net Internal Area (NIA) when measuring office or retail property. This is the useable area within a building measured to the internal face of the perimeter walls at each floor level. Gross Internal Area (GIA) is the area measured to the internal face of the perimeter walls at each floor level. There is an extensive range of inclusions and exclusions that also need to be taken into account during the measuring process that address the specific areas of a building. Gross External Area (GEA) is generally used for building cost estimation and is the preferred method of measurement for calculating building costs of residential property for insurance purposes. Party walls in shared ownership should be measured to their party line.
Most cost price indices do not include a provision for wardrobes, carpets fixtures and fittings, which are normally covered under a separate contents cover.
Blackdoor Property use a range of up to date published indices such as building costs guides, construction purchasing & orders indexes to accurately assess price movements and costs associated with construction. More recently, the cost of fuel and VAT increases have demonstrated some cost inflation acceleration within an environment of minimal new construction starts and civil engineering project declines.
Even though the cost of construction is at historic lows even a small pick up in general economic activity would reflect in increased build costs. This is important factor to acknowledge in pricing as the lead-time from property loss to reconstruction can be 12 to 18 months in some cases and the loss may occur in the eleventh month of the policy so you may need to plan for a claim cost in 24 to 30 months.
If we can be of assistance when assessing your insurance cover please contact us at firstname.lastname@example.org or call us on 01 6767177.